IS IT TRUE? June 22, 2011

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IS IT TRUE? June 22, 2011

IS IT TRUE that based on a call of reminder from Mayor Weinzapfel’s office that the City of Evansville DMD did indeed provide the City County Observer with access to all of the documents that we had requested under the Freedom of Information Act?…that this request was for everything between any City of Evansville entity and VenuWorks and with Woodruff Hospitality?…that our focus was and is on the management of the Arena and with the status of Evansville’s ability to actually get a downtown convention hotel off of the drawing board and onto the corner of Walnut and Martin Luther King Drive?…that we will be publishing more details of the pound of paper as the week progresses?…that there were no redactions and that nothing was held back?…that many of the caution flags that the City County Observer has raised and especially with respect to valuation are confirmed in the appraisal?

IS IT TRUE that it is now widely reported that there is a classic power struggle that is going on inside of Woodruff Hospitality LLC?…that at the present time that Martin Woodruff the majority shareholder controls the destiny of the ownership of the start-up business that was formed to build the downtown convention hotel that has had Evansville heads spinning for over a year now?…that the United States of America is a free and capitalistic nation and that Mr. Woodruff and the other shareholders of Woodruff Hospitality LLC are free to sell their shares to whatever QUALIFIED INVESTOR that they agree to sell them to?…that Mr. Woodruff and the other shareholders, one of which may be the Kunkel Group may keep their shares as long as they wish as well?…that in a free country that the market for the value that a corporate entity is perceived to possess and the negotiating skills of the ownership will determine any change of ownership?

IS IT TRUE that it has been reported for about a month that the Kunkel Group has intention to manage and acquire a majority interest in Woodruff Hospitality?…that it has been rumored for a few weeks but was just disclosed yesterday that there is another interested party?…that it sounds as though there may just be a bidding war going on for control of Woodruff Hospitality?…that we will be quite interested to see exactly how this Evansville episode of “Shark Tank” plays out?…that it had better play out quickly because the current extension of the closing date to show financing by Woodruff Hospitality LLC is June 30, 2011?…that is only 9 days from now?…that Woodruff Hospitality LLC requested a second 30 day extension to obtain financing from the ERC yesterday but that request was denied?…that if Woodruff Hospitality LLC does not satisfy this term in the “Downtown Hotel Development Agreement” by June 30th that there will be no valid contract in place to build a downtown convention hotel?

IS IT TRUE that the Evansville Redevelopment Commission just yesterday approved the reissue of a Request for Proposal to build the hotel that is essentially a request to assume the “Downtown Hotel Development Agreement” in its present form with the names and the dates changed?…that this opportunity is technically open to any interested party including Woodruff Hospitality LLC and the Kunkel Group should each entity choose to respond to the RFP in its present form?…that the real opportunity for the project to be reset to square one lies in the difficulty to obtain financing for the project according to the terms of the RFP?…that this will once again come down to VALUATION, COLLATERAL, AND LOAN GUARANTEES?

IS IT TRUE that in the commercial real estate market and particularly the hotel market of 2011 that the cost to construct greatly exceeds the present market value of the proposed hotel upon completion?…that this whole financing problem can be made to go away if the City of Evansville or some other entity that has the financial strength to guarantee the first loan steps forward?…that in the documents that the CCO examined yesterday that there were several letters from potential financiers stating exactly that in the respondents to the RFP bid packages?…that it has not just been the CCO that has taken this position during the past year but that some rather sophisticated financiers from “BIG CITIES” have been writing the same thing?

IS IT TRUE that just because someone writes an RFP with favorable or desired terms to themselves does not mean that the market will accept the terms nor does it mean that even a party that wishes to perform to the RFP can get financing?…that the next month will be the Reality Check for the financing phase of the Downtown Convention Hotel?

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10 COMMENTS

  2. Three comments: 1) See the article from the CP on this matter. Notice in the 5th paragraph that Kish states that he has been assured by Kunkel that they have the financing. Wouldn’t this assurance (surely in written form vs. over a beer at the MainGate ?) be a document that would be responsive to the CCO’s FOIA requests ?

    http://www.courierpress.com/news/2011/jun/21/redevelopment-commission-may-reopen-bids-downtown/

    2) With only 8 days after today to “get a deal done” before it’s back to Square One (RFP’s), why wouldn’t Kunkel just drag their feet, let the month of June go by the wayside, turn the calendar page and submit their Kunkel-only proposal for this project ? I do not wish in any way to disparage Mr. Woodruff, but it is my understanding that Kunkel brings the operational expertise (that Woodruff lacks), and as gleaned from the CP article, Kunkel ALREADY has the financing in place. It seems like Kunkel could rid itself of the Woodruff group entirely and put its already-funded proposal into play on July 1 simply by DOING NOTHING ???

    3) Given the Browing debacle and the life support nature of the Woodruff deal, would it not be appropriate to make the address of any hotel which eventually goes in here SQUARE ONE ? Hyatt Hotel, Square One, Evansville, IN 47708 ?

    • There was no such document in the package nor have we seen any reference to a document attributed to anyone from Kunkel. Your beer at the Maingate theory is probably quite valid on June 22, 2011.

    • I believe the answer to your #2 is this: “that it has been rumored for a few weeks but was just disclosed yesterday that there is another interested party?…that it sounds as though there may just be a bidding war going on for control of Woodruff Hospitality?…that we will be quite interested to see exactly how this Evansville episode of “Shark Tank” plays out?…”

      Kunkel can gamble and hope that the contract expires, but they run the risk of Woodruff making a deal with this other party in the next few days and ending up with nothing.

      Question is, why does anyone want to be a part of this hotel that is going to cost much more to build than it’s worth without getting the city to contribute a lot more money toward the project?

      • The C&P and News 7 (http://tristatehomepage.com/fulltext/?nxd_id=280717) reported that Verville Construction is positioned to take over the Woodward and Kunkle interests and commmence with the project. From these reports it looks like Kunkle will not sign over their minority interest, even though Kunkle has not been able to do anything with the project. Look forward to reading more on this possible White Knight taking over and finishing this Hotel project which has been completely mis-managed to date.

        • Interesting video. The words and the video did not match each other but the appearance of Verville is adding spice to the mix.

  3. “…that it sounds as though there may just be a bidding war going on for control of Woodruff Hospitality?…that we will be quite interested to see exactly how this Evansville episode of “Shark Tank” plays out?”

    There would still seem to be puzzle pieces missing, why a power play or bidding war for the control of a hotel that will cost more to build then it could possibly be appraised for, it was stated before that to be profitable the hotel would need a very high occupancy rate and roughly $200 per night per room which isn’t going to happen. $70-$120 a night would seem to be more in-line with the demographics, you can have the best venue in the world but if the hotel is way over charging for room/services it’ll never be profitable….so the question is who is going to subsidize the hotel? and what is the motivation to do so?

    • There are three motivations that come to mind: Money, revenge, and a past undercover deal cut with the present administration.

      • Agreed…we know Kunkel is neck-deep in the current administrations posterior, and it’s easy to figure where the financing for their portion of any deal would come from, must be a heck of a cash stream to siphon off of somewhere in this deal for all the parties involved…but where?

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